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Can You Cut Your Web Services Bill in Half?

Courtney Rubin

Business Writers

For an easy way to save money, an Israeli startup is suggesting you start by scrutinizing your Amazon Web Services bill.

In the past five years, Amazon's services have allowed startups to quickly and easily build a Web company on the (relatively) cheap by using servers in the cloud. Amazon reported earlier this month that its elastic cloud business has quadrupled since 2010.

NewVem, an analytics-based cloud management startup, has found that small companies typically overspend by 50 percent. It bears keeping in mind that NewVem's business is predicated on showing startups how they use Amazon Web Services and where they're wasting money–but their points are worth considering, no matter if the figures are inflated (or if your provider is not Amazon).

For the smallest startups–those with a monthly budget of less than $1,000 on Amazon Web Services–NewVem found that more than 50 percent of their rented services were idle. That could mean $500 per month in potential cost savings. (VentureBeat observed that the idle figure "might make sense, since small startups are more likely to see big spikes in traffic and usage relative to their daily norms.")

Users with a monthly spend of $3,000 or more were more likely to operate efficiently. However, a company blog post says "Despite this efficiency, there is still a significant amount of idle instances running, which complicate costs further." (Click here to see a chart about the percentage of idle instances.)

“Amazon is really a double-edged sword,” Zev Laderman, NewVem’s founder and CEO, told VentureBeat. “It’s a fantastic asset for startups, but many get trapped relying on it without having the tools to really manage it effectively.”

Amazon has tools that are supposed to help you manage your usage, but NewVem customers (satisfied ones, anyway) say that they don't help.

“We tried using Amazon’s tools to manage this, but they weren’t very helpful," Kobi Haddad, the CEO of Live Definition, told VentureBeat."Thanks to NewVem, we’ve rearranged how we deploy AWS, and I think that saved us about 20 percent each year.” Haddad described using AWS as "a utility, so just like when you use electricity, it’s easy to forget, and leave the lights on when you’re not at home.”

NewVem's analysis also found that more than half of "light" AWS users left on was critical IP ports open to the Internet, meaning your network is likely to accept whatever a hacker might choose to send, putting your data at risk.